Detroit, MI – Former Volkswagen executive Oliver Schmidt was sentenced to 84 months in federal prison in December 2017, following a guilty plea related to his role in a massive scheme to defraud the United States and consumers by concealing the use of “defeat devices” in diesel vehicles. The case, investigated by the FBI and the EPA’s Criminal Investigation Division, exposed a deliberate effort by Volkswagen to circumvent U.S. emissions standards and mislead regulators.
Schmidt, who served as the general manager of Volkswagen AG’s U.S. Environment and Engineering Office, admitted to conspiring with others to mislead both American regulators and customers. The scheme involved installing software designed to detect when a vehicle was undergoing emissions testing. Under testing conditions, the software activated full emissions controls. However, during normal driving, these controls were significantly reduced, resulting in nitrogen oxide (NOx) emissions up to 30 times higher than permitted under U.S. law. This allowed Volkswagen to market “clean diesel” vehicles that falsely claimed environmental friendliness and fuel efficiency.
The deception began as early as the summer of 2015 when Schmidt became aware of the defeat device. Instead of disclosing the truth, Schmidt participated in discussions with other VW employees on how to respond to regulatory inquiries without revealing the illegal software. He directly engaged with U.S. regulators in August 2015, attempting to secure approval for the continued sale of the diesel vehicles while knowingly concealing the existence of the defeat device. According to court documents, Schmidt acted on the instructions of management, prioritizing the company’s financial interests over environmental compliance and consumer trust.
Federal prosecutors emphasized the severity of Schmidt’s actions, highlighting the scale of the fraud and its impact on the American public. Acting Assistant Attorney General Cronan stated that Schmidt “chose to join the conspiracy and deceive U.S. regulators.” The Department of Justice has pursued both corporate and individual accountability in the case, sending a clear message that such environmental crimes will be prosecuted to the fullest extent of the law. The scheme caused losses exceeding $150 million and constituted obstruction of justice, further compounding the severity of the offense.
Key Facts
- Defendant: Oliver Schmidt
- Crime: Conspiracy to defraud the United States, Wire Fraud, and Clean Air Act violation
- State: Michigan
- Year: 2018 (Sentence handed down in December 2017, case originated in 2018)
- Statutes Violated: 18 U.S.C. 371 (Conspiracy), 42 U.S.C. 7413(c)(2)(A) (Clean Air Act), 18 U.S.C. 1343 (Wire Fraud)
- Penalty: 84 months imprisonment and a $400,000 criminal penalty
- Impact: Losses to victims exceeding $150 million
The case underscores the EPA’s commitment to enforcing environmental regulations and ensuring a level playing field for companies that adhere to the law. Acting Assistant Administrator Starfield noted the agency’s dedication to pursuing individuals who prioritize corporate gain over environmental protection. The investigation remains a significant example of the government’s ongoing efforts to combat corporate wrongdoing and protect the health of the environment and the American public.
Schmidt’s sentencing follows the prosecution of Volkswagen itself and another VW engineer, signaling a broader crackdown on emissions cheating within the automotive industry. The ongoing investigations, involving agencies like the FBI, EPA, and U.S. Immigration and Customs Enforcement, aim to deter similar fraudulent practices and restore public confidence in environmental compliance.
Source: EPA ECHO Enforcement Case Database
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